Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Doit]

Some full-on Farzyness for you:

Tesla Stock POST SPLIT Price Targets Thru 2035 - Bear, Base, Bull #TSLA | Farzad Mesbahi

Spoiler: Table of TSLA PTs thru 2035 - 3 scenarios

View attachment 844666

Cheers to the Longs!

My only question: how many of you billionaires still hanging out here by 2035?

 

[wipster]

Au contraire, I was bloody brilliantly clever. I continued to hold my shares and by sunup tomorrow I’ll have 3xs more! Most of those shares will have a cost basis of just over $2. Mwhahahahaha!

Damn, you got me beat... the basis for all my shares post new split will be $3.10... oh well, it'll do...

 

[TheTalkingMule]

My only question: how many of you billionaires still hanging out here by 2035?

These projections seem doable, but they probably aren't. Of course Elon could veer into other huge lines of business, but I don't think auto/transport and energy gets us very far beyond $10T.

At some point around 2028-2030 you're gonna start running into deflation from renewables taking over, then we gotta think the energy services start becoming comoditized.

Margins will tighten and we'll start moving into Star Trek mode where earnings may even become less of a priority. After all, "earnings growth" is only paramount now because we're locked into fossil-based scarcity and our financing of that system requires growth.

Solar don't need no growth!

I see us topping out at a hair over $3500 post post split. Maybe 2031.

 

[Artful Dodger]

Video feed placeholder for tomorrow is available on Youtube already:

SpaceX + T-Mobile Update | SpaceX - (Scheduled for 8/25/22, 8:00 PM EDT)

 

[Opus BC fan]

I've continued accumulating over the years.
My avg. cost basis will be $11.33.
My longest held lots (from 2011) will be $1.76

 

[Prunesquallor]

Well, color me impressed.

My E*Trade account correctly shows a SP of $297.10 and has tripled my number of shares!

 

[Ohmster]

Well, color me impressed.

My E*Trade account correctly shows a SP of $297.10 and has tripled my number of shares!

Not yet on Fidelity, but they did say it would happen on Thursday....so shall I check again in 32 minutes?

Yes, indeed, I ended up in the East Coast this week so I get my 3x shares 3 hours later.

Tesla Inc. option holders will be affected by an impending stock split.

Next Step​

Effective August 25, 2022, Tesla (TSLA) shares and options will go through a 3-for-1 split. Shareholders as of the close of business on Wednesday, August 24, will have split-adjusted shares deposited into their account on August 25. Customers holding Tesla options at the close of business on Wednesday, August 24, will have split-adjusted contracts deposited into their account on August 25.

[Edit1] Midnight. No change. Off to bed. Will wake up to increased seating....

[Edit2] 5:30 AM EST The eagle has landed.

 

[Ogre]

I’m not quite sure what to think about this comment. I still see people getting Teslas delivered with major flaws. Is Fremont just cranking out junk while Berlin and Shanghai have much better quality?

Are the Model Ys coming out of Austin going to be “Luxury” vehicles? I love my Model Y, but they would need a pretty significant update to their suspension to justify that claim.

https://twitter.com/x/status/1562632060442800133

EDIT: I don't think Fremont production is "Junk" so much as a bit inconsistent. Also... not super picky about paint, but paint quality on mine is pretty meh with small but obvious chips after just a year.

 

[Gigapress]

Haha, the reddit comments in this thread:

https://www.reddit.com/r/investing/comments/1k15cb

When the bull case turns out to be pessimistic...

The comments have great examples of how most retail investors thought about TSLA in 2012. Funny looking back.

Oh no, I didn't argue that it was impossible. I just would never base my stock valuations off of a projection so high that only a handful of businesses in history have accomplished it.

40% sales growth while maintaining a higher-then-industry margins over 10 FULL YEARS would be Herculean. But by using projections in that range for your valuation model you're effectively defeating the point of said valuation. There's no need to run a value analysis if your predictions for the company are dramatically higher than other investors. At that point just say "I love this company and I'm going to buy the stock because I think they will grow earnings at a rate astronomically higher than other analysts".

Just to illustrate this, a 20% annual sales growth rate, which is firmly in the "extreme growth" category for mid/large cap companies, would mean Tesla will be selling 145,500 cars in 2023. Compare that to your estimate of 665,300. So when you use outlandishly uncommon growth rates like 40% and carry them forward a full 10 years then they destroy the purpose of a valuation model.

If you really firmly believe tsla will grow sales 40% annually then just buy it regardless of price, because there's no way other investors are projecting values higher than that. But if you want to support your decision to buy with a real fundamental analysis then you need to use numbers more in the vicinity of "normal" levels of extreme growth.

When I considered tesla for the first time I thought I was being crazy generous by giving them a 20% sales growth rate for 5 years, assuming an above-industry margin of like 17%, and not factoring in a huge amount for infrastructure ramp up over those years...and I still didn't buy the stock just because my discount rate was very high based upon the massive risks I see to their ability to generate that type of growth in an extremely competitive industry.

I wouldn't call this "actual analysis" so much as pie-in-the-sky guesswork.

The model is superficial, doesn't document its assumptions and seemingly misses a great deal of detail with some very serious impact, specifically the money it will cost Tesla to bridge the gap between their current manufacturing capacity and these volume predictions.

How does Tesla remain seemingly the world's most profitable auto manufacturer? Again, your questions are spot on about competition. The apparent assumption in this model is that there is none. Just because there's none right now for the Model S, which is a high-end, high margin luxury product, doesn't mean there won't be any for the Gen III, which will be a lower-end, lower margin, mass-market product. Note the 20+% predicted margins for this car. No way. In fact, there already is competition for Tesla's Gen III because lower-price, higher volume cars are where most major manufacturers appear to be focusing their electric efforts. The Leaf, that new BMW, etc. In this market segment, Tesla is nowhere yet and it's going to face stiff competition.

You really hit the nail on the head with your questions.

You are underestimating the competition and you are not understanding the consumer.

First of all your limiting the consumer to only wanting all electric. Is this actual condition? Have you taken, or do you have a source to confirm the consumer wants only an electric vehicle. Or do consumers want the option of a standard combustion engine, hybrid electric plug in, or all plug in? If a percentage of the market does not want an electric vehicle Tesla is elimanated from that market.

Tesla is currently manufacturing in the old NUMMI plant, the joint venture between Toyota and GM. This was Toyota's first manufacturing facility in NA. Tesla also hired Gilbert Passin to be the VP or Manufacturing. He served a similiar role with Toyota North America (Toyota Motor Engineering & Manufacturing North America). He was the plant president and later VP of West Coast opperations. It should be noted that NUMMI never turned a profit. The vehicles manufactured there were the Toyota Matrix and Pontiac Vibe during Passin's reign. This facility is capable of producing 300,000 vehicles per year. Currently Tesla is forecasting 5,000 this year and 20,000 in the following years. Toyota sells 2 million vehicls a year in North America and 9 million globally.

Your claim about larger companies being the slowest to change shows you just how un-informed you are about the automotive industry. Take for example Toyota. They are constantly changing, just slowly with calculated steps since a failure in automotive industry can cost billions (is TSLA ready for that?). Benchmarking is the foundation of the auto world. Performance goals are changed weekly due to competitors. Also all major car manufactures have concepts, failed vehicles, and current successful hybrid of all electric vehicles.

Okay i'm done ranting. Here's just one example of how the market will be flooded with competition for the model S.

BMW i8: MPG= 90, Price = $120,000, Performance= 4.3 0-60, 155whp

Yeah, OP and everybody upvoting him are idiots. I especially like the part where his "model" inserts sales figures for a yet-to-be-made auto, and has it selling 25 times what any Tesla car has sold, ever. Within a decade. Does this guy even have the slightest idea how long it takes to build the kind of infrastructure required to build and sell that many cars?

…Toyota, for example, has nearly $18 billion USD in cash and equivalents. Do you really think they would just let Tesla dominate the market? Simple answer, no. They will build a couple new plants, learn from Tesla's trials and errors, and create their own vehicle that will be almost on par (in terms of quality) in less than a few years.

 

[insaneoctane]

However, Wall Street can't fleece HODLers.

They’ve been try ALL.YEAR.LONG.

 

[AudubonB]

I don't think all of us know that Elon's behavior is the reason for Q2's QoQ drop from Q1. It may have been a factor, but it is by my math at least 6x less influential than the collapse of the overall stock market which seems to have been triggered primarily by the ramifications of the war in Ukraine, by interest rate increases, and by the terrible natural disasters we've had this year. All the following numbers use pre-split TSLA prices.

First of all, if we do the measurement from Apr 1st to Jun 1st, TSLA fell 32% and the NASDAQ Composite fell 16%.

TSLA's beta is about 2.​

2 * 16% = 32%​

Performance on par with beta.​

Here's a scatter plot showing daily pairs of TSLA price and NASDAQ price at market open, from the beginning of 2020 until today. Even in this naive comparison, TSLA and NASDAQ have a surprisingly linear relationship with R^2 of 0.773 which indicates a strong correlation. Amazingly, this correlation has appeared strong across TSLA prices ranging from less than $100 to more than $1200.

View attachment 844682

Taking the same chart but zooming in on March 15th through Jun 15th to include Q2 and a couple weeks before and after Q2, the correlation is stronger with R^2 of 0.862, as we would expect. On a shorter time horizon, less information specific to Tesla's performance and prospects will come out than over a multiyear time period, and so TSLA would be more likely to be influenced by other factors not relating directly to Tesla matters. In this case, TSLA explosively outperformed the NASDAQ in 2020 as the company hit a series of major milestones, including finally achieving sustainable positive cashflow, demonstrating mass production of good cars in Shanghai, finally getting added to the S&P 500, holding Battery Day, and showing impressive earnings growth, all of which generated alpha and drove the stock price higher. TSLA's long-term growth profile makes its macro correlation weaker over longer time periods.

View attachment 844686

Overall, the data says that around 80% of the variation in the TSLA price can be predicted simply by knowing the NASDAQ Index for the day in question.

For example, today the NASDAQ is at 12432. Using the linear regression shown in the chart below to model the relationship between TSLA and NASDAQ based on the data from Mar 15th to Jun 15th, the model predicts a current TSLA price of $829. The actual current TSLA price is $891. That's only a 7% prediction error even with zero other information included in the model!

Imagine I traveled back in time to Jun 15th and posted here with a poll asking for TSLA price predictions for Aug 24th, and imagine the only hint I provided was that the NASDAQ would be sitting at 12432. How many people would guess within 7% accuracy ($829-$953)? How much work would most guessers put into estimation while neglecting or downplaying the overwhelming importance of the NASDAQ data point?

A similar story even holds for daily price fluctuations, which have a lot more randomness involved. Here we can see TSLA's beta of 2 (the slope of the line) and a correlation coefficient of 0.435. That is, 43.5% of TSLA's daily variation since 2020 began was explainable by daily variation in the NASDAQ Composite. I would bet that random chaotic motion causes a great deal of the remaining 56.5% of the variation, but that I don't have data for testing that.

On 479 out of 658 trading days, which is 73%, TSLA and the NASDAQ moved in the same direction. On days of significant action during which the NASDAQ rose or fell by an absolute value of at least 1%, TSLA moved the same direction 86% of the time!

View attachment 844688

The correlation is significantly stronger if we exclude days where the NASDAQ moved less than 1.5% up or down, leaving behind only days where most likely some kind of big news came out that moved the overall markets. Now R-squared is 0.591!

View attachment 844744

On the other hand, for the less-than-1.5% days for the NASDAQ, it seems TSLA just tended to do whatever it wanted without regard for what the NASDAQ was doing. This could be due to many factors, including alleged manipulation by options market makers seeking Max Pain, or random chaotic variation, or TSLA having some consistent tendency to jump twice as high as the market on days with big moves, or something else I'm not thinking of.

View attachment 844746


Here's another way to look at it. The table below shows, for each $100 price range for TSLA, the minimum and average NASDAQ open in the last 365 days.

View attachment 844727

This table clearly shows how, if we want TSLA to get back to $1000 and beyond, we either need to wait for the NASDAQ to reach like 14000+ or wait for good Tesla news, understood well enough by the market to cause a reaction, for TSLA to start substantially outperforming its beta. Tesla has never opened above $1000 with the NASDAQ less than 13000, and these days the NASDAQ is less than 13000. I expect, if all else fails, the market will manage to somewhat comprehend the numbers for Q3 deliveries and financials and TSLA will go up, and then Q4 deliveries and financials will knock their socks off in January.

Conclusion
Elon Musk is single-handedly crushing TSLA and the entire stock market with his stock selling, antics and controversial Twitter acquisition bid. More complaining about this is definitely warranted, and the author recommends further research and posting about it outside of the designated threads.

This is not investment or financial advice.

Would you please post just one more hint?
Where will NASDAQ be on Dec. 31?
Asking for a fiend.

 

[SmokyPeat]

Well, color me impressed.

My E*Trade account correctly shows a SP of $297.10 and has tripled my number of shares!

My E-Trade account split my options thrice, but definitely hasn't got the price straightened out yet. It's about 7x for whatever reason.

 

[DarthPierce]

My E-Trade account split my options thrice, but definitely hasn't got the price straightened out yet. It's about 7x for whatever reason.

My options in IBKR look messy. Strikes were ÷3 but quantity not ×3. Prices making no sense either way. Actual shares still unchanged.

Fidelity shares and options unchanged so far.

 

[Paul_SF]

My options in eTrade were split on the strike price, but not on the quantity. The quantity is 0. Guess even with enough notice this platforms somehow can’t get their *sugar* right.

Maybe we need a different way to do this things… They will surely like being left out of the…. games

 

[thesmokingman]

My E-Trade account split my options thrice, but definitely hasn't got the price straightened out yet. It's about 7x for whatever reason.

Yea this. My E-trade also has the correct shares but my cost basis is out of whack. Wait and see...

TD and Schwab haven't updated shares yet...

 

[thesmokingman]

EDIT: I don't think Fremont production is "Junk" so much as a bit inconsistent. Also... not super picky about paint, but paint quality on mine is pretty meh with small but obvious chips after just a year.

Ugh, all paint chips. Get PPF if you wanna avoid it in the future.

 

[StarFoxisDown!]

I don't think all of us know that Elon's behavior is the reason for Q2's QoQ drop from Q1. It may have been a factor, but it is by my math at least 6x less influential than the collapse of the overall stock market which seems to have been triggered primarily by the ramifications of the war in Ukraine, by interest rate increases, and by the terrible natural disasters we've had this year. All the following numbers use pre-split TSLA prices.

First of all, if we do the measurement from Apr 1st to Jun 1st, TSLA fell 32% and the NASDAQ Composite fell 16%.

TSLA's beta is about 2.​

2 * 16% = 32%​

Performance on par with beta.​

Here's a scatter plot showing daily pairs of TSLA price and NASDAQ price at market open, from the beginning of 2020 until today. Even in this naive comparison, TSLA and NASDAQ have a surprisingly linear relationship with R^2 of 0.773 which indicates a strong correlation. Amazingly, this correlation has appeared strong across TSLA prices ranging from less than $100 to more than $1200.

View attachment 844682

Taking the same chart but zooming in on March 15th through Jun 15th to include Q2 and a couple weeks before and after Q2, the correlation is stronger with R^2 of 0.862, as we would expect. On a shorter time horizon, less information specific to Tesla's performance and prospects will come out than over a multiyear time period, and so TSLA would be more likely to be influenced by other factors not relating directly to Tesla matters. In this case, TSLA explosively outperformed the NASDAQ in 2020 as the company hit a series of major milestones, including finally achieving sustainable positive cashflow, demonstrating mass production of good cars in Shanghai, finally getting added to the S&P 500, holding Battery Day, and showing impressive earnings growth, all of which generated alpha and drove the stock price higher. TSLA's long-term growth profile makes its macro correlation weaker over longer time periods.

View attachment 844686

Overall, the data says that around 80% of the variation in the TSLA price can be predicted simply by knowing the NASDAQ Index for the day in question.

For example, today the NASDAQ is at 12432. Using the linear regression shown in the chart below to model the relationship between TSLA and NASDAQ based on the data from Mar 15th to Jun 15th, the model predicts a current TSLA price of $829. The actual current TSLA price is $891. That's only a 7% prediction error even with zero other information included in the model!

Imagine I traveled back in time to Jun 15th and posted here with a poll asking for TSLA price predictions for Aug 24th, and imagine the only hint I provided was that the NASDAQ would be sitting at 12432. How many people would guess within 7% accuracy ($829-$953)? How much work would most guessers put into estimation while neglecting or downplaying the overwhelming importance of the NASDAQ data point?

A similar story even holds for daily price fluctuations, which have a lot more randomness involved. Here we can see TSLA's beta of 2 (the slope of the line) and a correlation coefficient of 0.435. That is, 43.5% of TSLA's daily variation since 2020 began was explainable by daily variation in the NASDAQ Composite. I would bet that random chaotic motion causes a great deal of the remaining 56.5% of the variation, but that I don't have data for testing that.

On 479 out of 658 trading days, which is 73%, TSLA and the NASDAQ moved in the same direction. On days of significant action during which the NASDAQ rose or fell by an absolute value of at least 1%, TSLA moved the same direction 86% of the time!

View attachment 844688

The correlation is significantly stronger if we exclude days where the NASDAQ moved less than 1.5% up or down, leaving behind only days where most likely some kind of big news came out that moved the overall markets. Now R-squared is 0.591!

View attachment 844744

On the other hand, for the less-than-1.5% days for the NASDAQ, it seems TSLA just tended to do whatever it wanted without regard for what the NASDAQ was doing. This could be due to many factors, including alleged manipulation by options market makers seeking Max Pain, or random chaotic variation, or TSLA having some consistent tendency to jump twice as high as the market on days with big moves, or something else I'm not thinking of.

View attachment 844746


Here's another way to look at it. The table below shows, for each $100 price range for TSLA, the minimum and average NASDAQ open in the last 365 days.

View attachment 844727

This table clearly shows how, if we want TSLA to get back to $1000 and beyond, we either need to wait for the NASDAQ to reach 14000+ or wait for good Tesla news, understood well enough by the market to cause a reaction, for TSLA to start substantially outperforming its beta. Tesla has never opened above $1000 with the NASDAQ less than 13000, and these days the NASDAQ is less than 13000. I expect, if all else fails, the market will manage to somewhat comprehend the numbers for Q3 deliveries and financials and TSLA will go up, and then Q4 deliveries and financials will knock their socks off.

Conclusion
Elon Musk is single-handedly crushing TSLA and the entire stock market with his stock selling, antics and controversial Twitter acquisition bid. More complaining about this is definitely warranted, and the author recommends further research and posting about it outside of the designated threads.

This is not investment or financial advice.

Very thorough and informative post but I think you misinterpreted my post . I was talking about the Shanghai Covid shutdowns which reduced QoQ production/deliveries and thus Tesla’s earnings dropped QoQ. Wall st, like we al knew they would, ran with the narrative that Teslas growth, earnings, margins, and so on had peaked….when they knew damn well it was a blimp.

I doubt TSLA would have even seen the 700’s at the market low is Shanghai hadn’t been hit with the Covid lockdowns.

 

[Singuy]

Very thorough and informative post but I think you misinterpreted my post . I was talking about the Shanghai Covid shutdowns which reduced QoQ production/deliveries and thus Tesla’s earnings dropped QoQ. Wall st, like we al knew they would, ran with the narrative that Teslas growth, earnings, margins, and so on had peaked….when they knew damn well it was a blimp.

I doubt TSLA would have even seen the 700’s at the market low is Shanghai hadn’t been hit with the Covid lockdowns.

I believe wall street knew about it being a blimp but will use the opportunity to sell off and then buy back in after all the bad news have been exhausted. This is just the nature of the market. Just like how everyone and their mother knows that after 30 years, the stock market will only go up. It's 100% guaranteed that if you invest into the overall market today, you will have a higher value over the long term. However even with this information, the market will zig zag its way up over the long term, filled with macro and micro drama that are all small and temporary blimps over a 30 year chart.

Red days are only for correctional purposes to adjust the slope of the upward trend over time.

 

[Singuy]

I’m not quite sure what to think about this comment. I still see people getting Teslas delivered with major flaws. Is Fremont just cranking out junk while Berlin and Shanghai have much better quality?

Are the Model Ys coming out of Austin going to be “Luxury” vehicles? I love my Model Y, but they would need a pretty significant update to their suspension to justify that claim.

https://twitter.com/x/status/1562632060442800133

EDIT: I don't think Fremont production is "Junk" so much as a bit inconsistent. Also... not super picky about paint, but paint quality on mine is pretty meh with small but obvious chips after just a year.

In my mind there's a difference between premium and luxury which has nothing to do with exterior build quality.

Premium to me first starts off with the price, with the base vehicle having to be at least 38k or higher with hp at least over 200. Interior is slightly better than a fully loaded standard car with usually fake leather as base, some wood/aluminum trim and soft plastics. Standard cars usually have wood veneers and plastics that look like aluminum.

Luxury steps it up in the interior with high quality stitched leather, many leather surfaces you usually touch, at least 300 bhp, usually v6 superchargers or higher to really tune in that smoothness, cool ambient lights, bigger screens, load of sound proofing, car feels like a boat, doors feel heavy, lots of aluminum/wood surfaces and high quality metal push buttons.

So if he is talking about luxury, then we are talking about a step up in interior and not just good fit and finish.

 

[WADan]

As California moves ahead on electric vehicles, Missouri, other states try to pull plug

California regulators were set to issue a rule Thursday requiring that 100 percent of all new cars sold in the state by 2035 be electric

www.stltoday.com

Oh, brother! The other half of America is still not awakened yet!